June 3, 2018 comment and Berkshire Update

On Friday, the S&P 500 was up a hefty 1.1% while Toronto was down 0.1%.

There were no particularly noteworthy moves in the stocks on out list.

The report for Berkshire Hathaway is updated and rated (lower) Buy at $192.23

Due to its insurance operations and due to market value changes in the value of its huge stock investments, Berkshires’ GAAP earnings are inherently volatile. This has become much more the case in 2018 because unrealized changes in market value of its investment securities are now reflected in earnings rather than only in comprehensive earnings as was previously the case.

Berkshire also reports operating earnings which are more stable but which are still affected by sometimes volatile results from catastrophe insurance operations. And, operating earnings over time understate “true” earnings because they ignore all gains on securities and those have been reliably positive (although volatile) over longer periods of time.

Many of Berkshire’s business are growing earnings at a good rate at this time. In part, this is due to lower income tax rates.

Perhaps the best value indicator is the price to book value. At 1.37 it is currently moderately attractive.

The B shares had briefly hit a high of over $215 in January. The current price of $192 may not be a screaming bargain but it seems reasonable attractive. Depending on availability of funds I will likely add to my small position in Berkshire.